If you have discussed your investments with a financial planner from The Financial Advisors Association of Canada, chances are your advisor has suggested segregated funds. But what are seg funds and how do they differ from traditional mutual funds?

A seg fund is actually an insurance contract with two parts: an investment that produces the return and an insurance policy that covers the risk. The seg fund is like a mutual fund, because you are pooling your money with other people to share investment gains. But because life insurance companies issue segregated funds, there is a guarantee attached that protects the investor’s principal from sudden market declines. Think of such an investment as a mutual fund with a safety net.

A built-in guarantee
Insurance companies are required by law to build added protection into investment products. Seg fund policies guarantee that most of your initial investment is protected in the event of death or at the time of maturity. Depending on the provider, this guarantee may vary from 75 to 100 per cent of the principal amount.

For example, if you invested $25,000 in a 10-year seg fund policy with a 100 per cent guarantee, you would receive your initial investment plus profits made from market gains at the time of maturity. If the value of the seg fund policy has fallen below $25,000 at maturity, the principal remains protected. You can periodically “lock in” the protection on the principal when the policy has escalated in value. This resets your 10-year guarantee period.

History of segregated funds
Seg funds were first introduced by insurance companies more than 30 years ago as a fixed income product for pension funds. Later they were offered to investors as a creditor-proof investment. Although they invested in stock markets, they were considered to be conservative products very prudently managed.

In the late 1990s, mutual fund companies began teaming up with insurers to boost the investment return potential. Seg funds began to look more like mutual funds, with sectoral funds, index funds, and foreign funds added to the mix of investments. As interest rates dropped, more conservative investors moved from term deposits and GICs into seg funds because of the guarantees.

Seg fund or mutual fund
Whether a particular seg fund is any more or less attractive than a mutual fund, however, will depend on your personal circumstances, and the investment strategy that you have worked out with your Advocis financial advisor.

Like mutual funds, segregated funds contain a diversified group of solid investments. They come in various sizes and asset mixes, and benefit from the experience of a qualified portfolio manager. Where the two types of funds part company is in flexibility and the added cost of insuring the principal.

Entrepreneurs and small business owners may want to consider the potential creditor protection offered by seg fund policies. Because they are insurance policies, they enjoy creditor protection under provincial insurance legislation.

The cost of a guarantee
While a disciplined, long-term approach to the market is always advised, a guarantee is not for everybody. Some investors may not want to incur the added cost of guaranteeing the principal invested in a seg fund. That cost varies depending on the insurance company.

Some seg funds have higher management expense ratios than mutual funds. Some guarantee only 75% of principal, to keep the MER lower. Some make the 100% guarantee an option that the consumer can pay for.

Some investors see such a guarantee as unnecessary since it is highly unlikely that market values will be lower than the principal investment over any 10-year period. Others view the added cost as an investment in peace of mind.

Seg fund advantages
There are other advantages to a seg fund policy.

One is the reset option. As a seg fund investor, you can protect profits inside the fund. What it does is allow fundholders to lock in gains when market values are high. If, for example, your $50,000 seg fund policy has increased in value by $11,000, you can use the reset option to protect the full $61,000. Once again, the reset option is not for everybody since it also resets the 10-year clock on the fund’s guarantee.

Seg fund policies are also a solid estate planning tool. Upon death, the market value or the guaranteed principal is paid out directly to the beneficiary without being subject to provincial probate fees.

Want to save up for your retirement, for your education, or save for your first house? A Registered Retirement Savings Plan or the RRSP in Maple Ridge provides you with a flexible way to save while still having the potential for great returns and the added benefit of having tax-free growth. Contact me or my office Manion & Associates Financial Services to learn more.

The RRSP in Maple Ridge. Peace of mind for You.

If you are a Canadian resident age 18 and up, you can contribute up to 18% of your income to a RRSP in Maple Ridge. Any unused contribution room can be carried forward, but there are penalties for over-contributing to a RRSP in Maple Ridge. A RRSP in Maple Ridge is a powerful savings tool that will benefit adults of all ages, as well as both high and low wage earners.

When helping you with your RRSPs in Maple Ridge, as with all your financial planning in Maple Ridge needs will be individualized to meet your investment goals. With a Registered Retirement Savings Plan in Maple Ridge you pay no tax on investment growth, the RRSP in Maple Ridge is one of the best ways to save throughout your entire lifetime for retirement savings in Maple Ridge. Get the assistance you need, talk to me or one of my partners at Manion & Associates Financial Services.

When you save with a RRSP in Maple Ridge you can expect:

1.) No tax paid on earnings (interest, capital gains, dividends)

2.) Tax deduction for contributions made to your RRSP in Maple Ridge

3.) A wide section of insurance, deposit, and investments options to choose from.

Want to save up for your retirement, for your education, or save for your first house? A Registered Retirement Savings Plan or the RRSP in Maple Ridge provides you with a flexible way to save while still having the potential for great returns and the added benefit of having tax-free growth. Contact me or my office Manion & Associates Financial Services to learn more.

If you are a Canadian resident age 18 and up, you can contribute up to 18% of your income to a RRSP in Maple Ridge. Any unused contribution room can be carried forward, but there are penalties for over-contributing to a RRSP in Maple Ridge. A RRSP in Maple Ridge is a powerful savings tool that will benefit adults of all ages, as well as both high and low wage earners.

When helping you with your RRSPs in Maple Ridge, as with all your financial planning in Maple Ridge needs will be individualized to meet your investment goals. With a Registered Retirement Savings Plan in Maple Ridge you pay no tax on investment growth, the RRSP in Maple Ridge is one of the best ways to save throughout your entire lifetime for retirement savings in Maple Ridge. Get the assistance you need, talk to me or one of my partners at Manion & Associates Financial Services.

Want to save up for your retirement, for your education, or save for your first house? A Registered Retirement Savings Plan or the RRSP in Pitt Meadows provides you with a flexible way to save while still having the potential for great returns and the added benefit of having tax-free growth. Contact me or my office Manion & Associates Financial Services to learn more.

When helping you with your RRSPs in Pitt Meadows, as with all your financial planning in Pitt Meadows needs will be individualized to meet your investment goals. With a Registered Retirement Savings Plan in Pitt Meadows you pay no tax on investment growth, the RRSP in Pitt Meadows is one of the best ways to save throughout your entire lifetime for retirement savings in Pitt Meadows. Get the assistance you need, talk to me or one of my partners at Manion & Associates Financial Services.

If you are a Canadian resident age 18 and up, you can contribute up to 18% of your income to a RRSP in Pitt Meadows. Any unused contribution room can be carried forward, but there are penalties for over-contributing to a RRSP in Pitt Meadows. A RRSP in Pitt Meadows is a powerful savings tool that will benefit adults of all ages, as well as both high and low wage earners.

Want to protect your family from financial consequences of your death? Life Insurance in Pitt Meadows provides you with a flexible way to protect your loved ones from the financial costs and added stresses. Contact me or my office Manion & Associates Financial Services to learn more.

When helping you with your Insurance in Pitt Meadows, as with all your financial planning in Pitt Meadows needs will be individualized to meet your Insurance goals. With a Insurance in Pitt Meadows we match your needs to proper structured Insurance in Pitt Meadows policy to insure you are properly protected. Get the assistance you need, talk to me or one of my partners at Manion & Associates Financial Services.

Want to save up for your retirement, for your education, or save for your first house? A Registered Retirement Income Fund or the RRIF in Maple Ridge provides you with a flexible way to save while still having the potential for great returns and the added benefit of having tax-free growth. Contact me or my office Manion & Associates Financial Services to learn more.

When helping you with your RRIFs in Maple Ridge, as with all your financial planning in Maple Ridge needs will be individualized to meet your investment goals. With a Registered Retirement Income Fund in Maple Ridge you pay no tax on investment growth, the RRIF in Maple Ridge is one of the best ways to save throughout your entire lifetime for retirement savings in Maple Ridge. Get the assistance you need, talk to me or one of my partners at Manion & Associates Financial Services.

If you are a Canadian resident age 18 and up, you can contribute up to 18% of your income to a RRIF in Maple Ridge. Any unused contribution room can be carried forward, but there are penalties for over-contributing to a RRIF in Maple Ridge. A RRIF in Maple Ridge is a powerful savings tool that will benefit adults of all ages, as well as both high and low wage earners.

Want to save up for your retirement, for your education, or save for your first house? A Registered Retirement Savings Plan or the RRSP in Maple Ridge provides you with a flexible way to save while still having the potential for great returns and the added benefit of having tax-free growth. Contact me or my office Manion & Associates Financial Services to learn more.

When helping you with your RRSPs in Maple Ridge, as with all your financial planning in Maple Ridge needs will be individualized to meet your investment goals. With a Registered Retirement Savings Plan in Maple Ridge you pay no tax on investment growth, the RRSP in Maple Ridge is one of the best ways to save throughout your entire lifetime for retirement savings in Maple Ridge. Get the assistance you need, talk to me or one of my partners at Manion & Associates Financial Services.

If you are a Canadian resident age 18 and up, you can contribute up to 18% of your income to a RRSP in Maple Ridge. Any unused contribution room can be carried forward, but there are penalties for over-contributing to a RRSP in Maple Ridge. A RRSP in Maple Ridge is a powerful savings tool that will benefit adults of all ages, as well as both high and low wage earners.

Want to protect your family from financial consequences of your death? Life Insurance in Maple Ridge provides you with a flexible way to protect your loved ones from the financial costs and added stresses. Contact me or my office Manion & Associates Financial Services to learn more.

When helping you with your Insurance in Maple Ridge, as with all your financial planning in Maple Ridge needs will be individualized to meet your Insurance goals. With a Insurance in Maple Ridge we match your needs to proper structured Insurance in Maple Ridge policy to insure you are properly protected. Get the assistance you need, talk to me or one of my partners at Manion & Associates Financial Services.

Want to protect your family from financial consequences of your death? Life Insurance in Maple Ridge provides you with a flexible way to protect your loved ones from the financial costs and added stresses. Contact me or my office Manion & Associates Financial Services to learn more.

When helping you with your Life Insurance in Maple Ridge, as with all your financial planning in Maple Ridge needs will be individualized to meet your Insurance goals. With a Life Insurance in Maple Ridge we match your needs to proper structured Life Insurance in Maple Ridge policy to insure you are properly protected. Get the assistance you need, talk to me or one of my partners at Manion & Associates Financial Services.

Want to save up for a new car or boat, for your education or that of a clild’s, or save for your next vacation? A Tax-Free Savings Account or the TFSA in Maple Ridge provides you with a flexible way to save while still having the potential for great returns and the added benefit of having tax-free income. Contact me or my office Manion & Associates Financial Services to learn more.

When helping you with your Tax Free Savings Accounts in Maple Ridge, as with all your financial planning in Maple Ridge needs will be individualized to meet your investment goals. With a Tax Free Savings Account in Maple Ridge you pay no tax on investment income or on withdrawals, the Tax Free Savings Account in Maple Ridge is one of the best ways to save throughout your entire lifetime for emergencies, short term goals, or to compliment retirement savings in Maple Ridge. Get the assistance you need, talk to me or one of my partners at Manion & Associates Financial Services.

If you are a Canadian resident age 18 and up, you can contribute up to $5,000 to a Tax Free Savings Account in Maple Ridge. Each year, another $5,000 (periodically indexed to Consumer Price Index) will be added to your contribution room. Any unused contribution room can be carried forward, but there are penalties for over-contributing to a Tax Free Savings Account in Maple Ridge. A Tax Free Savings Account in Maple Ridge is a powerful savings tool that will benefit adults of all ages, as well as both high and low wage earners.